October 2013

October 15, 2013, by Mandour & Associates, APC

Los Angeles - Nestle has encountered a huge setback as the European Patent Office (EPO) this week threw out a patent that has to do with its popular Nespresso single serve coffee system.   The regulatory body, which covers 28 European countries, did not set forth its exact reasons for invalidating the patent, but noted that such an explanation will be forthcoming in the next few weeks.   This blow comes at a crucial time for Nestle as it has been publicly attempting to stop several rivals, such as Ethical Coffee Company SA and Mondelez International Inc., from producing coffee pods that fit in the Nespresso machines.

The now thrown out patent was originally granted by the EPO in 2010 and covered the way the pods fit into and are ejected from the device.   With its patent protection now eliminated, Nestle is in a weakened position to prevent others from making compatible pods.  In April of this year, a London Judge ruled that Nespresso customers have a right to purchase coffee pods from any maker they choose and that Nestle could not prevent this.  Just a few months before that ruling, courts in Germany and Switzerland refused to ban the unlicensed sale of coffee pods that fit into Nespresso machines.   Notably, the Nespresso brand coffee pods are the only ones authorized by Nespresso and cost about three times the price of the rival brands.

With so many recent impediments, Nestle executives are predictably upset.   In a recent statement, a spokesperson responded to the patent revocation stating, “We believe that the decision fails to recognize the unique innovations inherent in the design of the Nespresso system.”  The statement went on to say that the invalidation was unlikely to significantly impact Nespresso sales.   This comes as welcome news for investors of the brand, which makes up about 4% of Nestle’s total $100 billion in annual sales.

Despite Nestle’s predictions of how much the recent drawbacks will or will not affect Nespresso, several outside sources have identified a negative effect already taking place.  One estimate proffered by Bank Vontobel said that Nespresso sales growth momentum has decelerated to 16% in 2012, down from 28% three years prior.

October 1, 2013, by Mandour & Associates, APC

Los Angeles - A newly filed patent application by Tesla Motors reveals the company’s interest in finally finding a solution to one of the electric car’s biggest problems: how to keep cars going on long trips in between charging stations.   The  California-based company that produces only electric vehicles submitted a patent application for an innovative metal-air battery that would kick in once its normal lithium-ion battery runs out.  This technology would make it so that Tesla owners would have the option to switch to this secondary battery when running low on a charge, allowing it to continue for up to another 400 miles.

Tesla’s approach differs in comparison to other electric car manufacturers, such as Chevrolet with its Volt, which includes a four-cylinder engine that can generate backup energy for a range of 300-400 miles.  Compared to cars like the Volt, some kind of reliable secondary power source is essential for Tesla because unlike hybrid owning counterparts, Tesla owners can’t opt to stop off and fill up at a gas station.

The new patent is described by Tesla as “Electric Vehicle Extended Range Hybrid Battery Pack System” and spells out how the invention “provides a power source comprised of a first battery pack (e.g., a non-metal-air battery pack) and a second battery pack (e.g., a metal-air battery pack), wherein the second battery pack is only used as required by the state-of-charge (SOC) of the first battery pack or as a result of the user selecting an extended range mode of operation.” Thus, with the new technology, the lithium-ion battery already featured in Tesla cars would continue to do the heavy lifting, with the metal air battery serving as a backup.  The metal-air battery is useful for this specific purpose because it uses oxygen as one of its electrodes to generate power.  While the battery easier to charge, these metal-air batteries offer only short term potential as they tend to have a much shorter lifespan than traditional batteries.

Many have noted that by eliminating a conventional cell battery and replacing it with a battery that uses air, Tesla may be the first to successfully tackle the long distance charging problem and might have found a less expensive option that can be accessed by the masses.   Indeed, Tesla CEO Elon Musk has long expressed his intention to make Tesla a brand that provides an electric car option for every level of the consumer market.